MetLife 2007 Annual Report Download - page 37

• Brazil by $37 million, net of income tax, due to the unfavorable impact of increases in policyholder liabilities due to higher than
expected mortality on specific blocks of business in the prior year, an increase in litigation liabilities in the prior year and the
unfavorable impact of the reversal of a tax credit in the prior year, as well as growth of the in-force business.
• Ireland by $19 million, net of income tax, primarily due to the utilization of net operating losses for which a valuation allowance had
been previously established as well as higher investment income resulting from higher invested assets from a capital contribution,
partially offset by higher start-up expenses and currency transaction losses.
• Japan by $22 million, net of income tax, due to improved hedge results and business growth, partially offset by the impact of foreign
currency transaction losses.
• Hong Kong by $9 million, net of income tax, due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting
consolidation of the operation, as well as business growth.
• Chile by $8 million, net of income tax, primarily due to continued growth of the in-force business, higher joint venture income and
higher returns on inflation indexed securities, partially offset by higher compensation, infrastructure and marketing expenses.
• The United Kingdom by $3 million, net of income tax, due to a reduction of claim liabilities resulting from an experience review, offset
by an unearned premium calculation refinement.
• Australia by $1 million, net of income tax, due to changes in foreign currency exchange rates offset by higher claims and business
growth.
Partially offsetting these increases, income from continuing operations decreased in:
• The home office by $9 million, net of income tax, due to higher economic capital charges and investment expenses of $16 million, net
of income tax, a $3 million increase in contingent tax expenses in the current year, as well as higher spending on growth and
initiatives, partially offset by the elimination of certain intercompany expenses previously charged to the International segment and a
tax benefit associated with a prior year income tax expense of $7 million related to a revision of an estimate.
• India by $3 million, net of income tax, primarily due to headcount increases and growth initiatives, as well as the impact of valuation
allowances established against losses in both years.
• South Korea by $4 million, net of income tax, due to a favorable impact in the prior year of $38 million, net of income tax, in DAC
amortization associated with the implementation of a more refined reserve valuation system, as well as additional expenses in the
current year associated with growth and infrastructure initiatives, partially offset by continued growth in its variable universal life
business, lower DAC amortization in the variable universal life business due to favorable market performance and a lower increase in
claim liabilities.
The remainder of the change in income from continuing operations can be attributed to contributions from the other countries.
Revenues
Total revenues, excluding net investment gains (losses), increased by $858 million, or 19%, to $5,362 million for the year ended
December 31, 2007 from $4,504 million for the comparable 2006 period.
Premiums, fees and other revenues increased by $560 million, or 16%, to $4,114 million for the year ended December 31, 2007 from
$3,554 million for the comparable 2006 period.
Premiums, fees and other revenues increased in:
• Mexico by $133 million primarily due to higher fees and growth in its institutional and universal life businesses, a decrease of
$13 million in experience refunds during the first quarter of 2007 on Mexico’s institutional business, as well as the adverse impact in
the prior year of an adjustment for experience refunds on Mexico’s institutional business. These increases were offset by lower fees
resulting from management’s update of assumptions used to determine estimated gross profits, and various one-time revenue items
for which the prior year benefited by $16 million and the current year benefited by $4 million.
• Hong Kong by $98 million due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting consolidation of the
operation, as well as business growth.
• Chile by $94 million primarily due to higher annuity sales resulting from a higher interest rate environment, improved competitive
conditions and an expected rate increase in 2008, higher institutional premiums from its traditional and bank distribution channels, as
well as the decrease in the prior year resulting from management’s decision not to match aggressive pricing in the marketplace.
• South Korea by $90 million primarily due to higher fees from growth in its guaranteed annuity business and variable universal life
business.
• Brazil by $35 million primarily due to changes in foreign currency exchange rates and business growth.
• The Company’s Japan operation by $31 million due to an increase in reinsurance assumed.
• Australia by $26 million as a result of growth in the institutional and reinsurance in-force business, an increase in retention levels and
changes in the foreign currency exchange rates.
• Argentina by $21 million primarily due to an increase in premiums and fees from higher pension contributions resulting from higher
participant salaries and a higher salary threshold subject to fees and growth in bancassurance, partially offset by the reduction of cost
of insurance fees as a result of the new pension system reform regulation.
• Taiwan and India by $21 million and $11 million, respectively, primarily due to business growth.
Partially offsetting these increases, premiums, fees and other revenues decreased in:
• The United Kingdom by $3 million due to an unearned premium calculation refinement partially offset by changes in foreign currency
rates.
The remainder of the change in premiums, fees and other revenues can be attributed to contributions from the other countries.
Net investment income increased by $298 million, or 31%, to $1,248 million for the year ended December 31, 2007 from $950 million
for the comparable 2006 period.
Net investment income increased in:
• Chile by $148 million due to the impact of higher inflation rates on indexed securities, the valuations and returns of which are linked to
inflation rates, higher joint venture income, as well as an increase in invested assets.
• Mexico by $46 million due to an increase in invested assets, partially offset by a decrease in yields, exclusive of inflation.
33MetLife, Inc.